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Financial stability and interest‐rate policy: A quantitative assessment of costs and benefit

Stefan Laséen () and Andrea Pescatori

Canadian Journal of Economics/Revue canadienne d'économique, 2020, vol. 53, issue 3, 1246-1273

Abstract: Abstract Should monetary policy use its short‐term policy rate to stabilize the growth in household credit and housing prices with the aim of promoting financial stability? We ask this question for the case of Canada. We find that, to a first approximation, the answer is no. Résumé. Stabilité financière et politique de taux d’intérêt: évaluation quantitative des coûts et des avantages. Afin de favoriser la stabilité financière, la politique monétaire devrait‐elle utiliser son taux directeur à court terme pour équilibrer la croissance de l’endettement des ménages et du prix des logements ? Nous posons cette question pour le Canada. Dans une première approximation, notre réponse est négative.

Date: 2020
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https://doi.org/10.1111/caje.12458

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Working Paper: Financial Stability and Interest-Rate Policy: A Quantitative Assessment of Costs and Benefits (2016) Downloads
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